Saturday, May 31, 2008
History doesn’t repeat itself, but it does rhyme
The '30s? The '70s? No, U.S. economy may defy a replay of either
"The probability of a 1930s-style economic black hole ... is virtually nil". As for the '70s, back then both prices and wages spiraled. But in 2008 "have you asked for a raise lately?" --- So it's not the '70s all over again, nor the '30s. It's a very different world, and we're making it up as we go along.
Posted by drewster @ 08:51 PM (409 views)
4 thoughts on “History doesn’t repeat itself, but it does rhyme”
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icarus says:
He spends a lot of time explaining why it’s not the 70s all over again but no time at all on why it’s not the 30s, except to say that things aren’t that bad – yet.
drewster says:
icarus, I agree.
“But the first-quarter data, and many of the economic reports since, just aren’t accommodating the depression mongers.”
Hmm, I wonder if the Americans could be fiddling the numbers? The infamous Births / Deaths Model is used to “adjust” the unemployment figures; the GDP Deflator is used to adjust the growth stats; and the CPI is used just about everywhere to massage the figures.
I still think we’re on track for something different; perhaps a combination of ’30s and ’70s problems. History doesn’t repeat itself, but….
stillthinking says:
Again there is this strong link that wage moderation controls inflation, which you can often see quoted. But if inflation is an increase in the money supply relative to the size of an economy, then why would wage moderation amongst basically the bottom half of workers control inflation ? They earn less in real terms, and they didn’t get any of the additional money supply.
I don’t see how workers accepting a lower wage in real terms controls inflation. I can see that when they stop borrowing as a consequence inflation becomes lower, but not just from reduced wages… I also don’t see that producers lowering prices due to lack of demand controls inflation, going to stagflation yes, controlling inflation no.
it_is_going_with_a_bang says:
Workers not demanding pay rises because they are scared to is hardly a measure of how bad things might get.
It just means they are very worried and afraid to push it.
Afterall they have the option of spending less money, that’l do their economy a world of good….